What are “junk” health insurance policies?

Some private health insurance policies are so basic they are known as “junk policies”. They are designed solely for price and usually don't cover common serious diseases, like cancer, stroke or heart disease. Three common “junk” hospital policies are:

Basic (entry level) private hospital policies that cover a small number of procedures such as accidents, wisdom teeth removal, appendix surgery, knee investigations, and reconstructions.

Accident and ambulance only cover.

Public hospital policies that let you choose your own doctor in a public hospital but have public hospital waiting times.

While these policies may help people to avoid the Medicare Levy Surcharge, none do what private health insurance is designed to do: provide relief for public hospitals.

Accident cover might sound practical so you can use a private hospital in an emergency. However, if you use the emergency department of a private hospital, this is considered an outpatient service until the hospital admits you, so you may have out-of-pocket costs for services plus an emergency room fee of around $300.

Most accident policies only cover you if you go to the emergency room within 24 hours. So, if you go to your GP or take a day or so to see a doctor at A & E after an accident, you may not be eligible for treatment under your accident cover.

Regardless of your cover, Medicare fully covers your treatment in the emergency departments of public hospitals and ambulance cover is free for residents of Queensland and Tasmania.

If price is a major concern, the Private Health Insurance Ombudsman suggests members take out a more comprehensive hospital cover with a higher excess or lower level of extras cover, rather than a policy with restrictions or exclusions. If you do take out a policy with restrictions or exclusions, make sure you understand these restrictions mean you’re taking on a higher risk in exchange for a lower premium.

Should you later find you require these services, you may have to wait to receive them as a public patient, or upgrade to a higher hospital cover and complete a 12-month waiting period for pre-existing conditions to be covered as a private patient.

While some TUH covers allow you to choose restrictions and exclusions for some conditions, all our hospital covers include serious conditions such as cardiac and cancer care (waiting periods apply).